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Tax-privileged lump-sum payment or not?

Tax-privileged lump-sum payment or not?

The Federal Supreme Court had to decide whether a severance payment made by a taxpayer was a lump-sum payment that the taxpayer wanted to receive in a tax-privileged manner.

For compensation to be recognised as a lump-sum payment, all the following three conditions must be met:

  1. the taxable person leaves the company after reaching the age of 55,
  2. the gainful employment is definitively discontinued and
  3. the departure from the company or its pension scheme results in a gap in the pension provision.

As the taxpayer never declared that he was giving up his employment, the payment is not deemed to be a lump-sum benefit. (Source: BGE 9C_237/2023 of 5 March 2024)